The founders of Mindtree are likely to sell their stake to Larsen & Toubro, as the engineering conglomerate gets ready to take control of the $1 billion mid-tier IT services provider they co-founded two decades ago, people familiar with the development said.
The founders — Krishnakumar Natarajan, Rostow Ravanan, Subroto Bagchi and NS Parthasarathy — have expressed a desire to exit the company, but will do it in a phased manner, the people said.
Ravanan will remain as the CEO of Mindtree till L&T finds a replacement, they said.
The founders and family members together hold a 13.32% stake in the company. Text messages sent to Natarajan, Ravanan and Bagchi remained unanswered till press time.
ET reported on Wednesday that L&T had taken a 51.8% controlling stake in the company after Mindtree’s key investors such as Arohi Asset Management and Nalanda Capital found the engineering company’s offer of ?980 per share better than its market price.
The Mindtree stock closed at?936.15 on Wednesday.
L&T made a takeover bid in March after it entered into a deal to buy Cafe Coffee Day owner VG Siddhartha’s 20.32% in Mindtree.
It made an open offer starting June 17 at ?980 apiece to buy 51.3 million shares, or a 31% stake in the company, over and above the 28% it picked up from Siddhartha and through open market purchases.
The offer is on till June 28.
L&T aims to own 66% in the tech services exporter.
Last week, L&T named its chief executive and managing director SN Subrahmanyan, senior executive vice-president for L&T’s defence business JD Patil and chief financial officer Ramamurthi Shankar Raman to the Mindtree board. Shareholders are expected to approve their nominations on July 16 during the company’s annual general meeting.
L&T has also proposed two independent directors — former L&T executive Prasanna Rangacharya Mysore and Deepa Gopalan Wadhwa, a former Indian Foreign Service officer — to the Mindtree board.
Cofounder Bagchi, who had sought renewal of his term as a board member before the open offer, later declined to take up the position.
L&T chairman AM Naik had told ET earlier this month that the founders had remained hostile despite the engineering company’s overtures.
“Mindtree had a golden opportunity to combine with L&T to be part of a growth story, but it has stubbornly been hostile about it,” Naik had said. “We have categorically said that this is not a hostile offer. But when an opportunity presents itself to us when one of the early investors, Siddhartha, approached us three times for the deal, are we supposed to ignore it?”
Source: Economic Times